FRANKFURT (MNI) – The European Central Bank will continue to follow
the principle of using the highest available credit rating when deciding
whether to accept Greek debt as collateral, the Financial Times
reported, citing a senior finance official.
The comment, published in Tuesday’s edition of the business daily,
follows a downgrade from Standard and Poor’s on Monday of Greek
sovereign debt to ‘CCC’ from ‘B’. The agency also warned that it would
consider the French proposal of a debt rollover as a “selective
default”.
“In part, the downgrade reflected our view of the rising risk that
an enhanced official financing package addressing the Greek government’s
2011-2014 financing needs could require private sector debt
restructuring in a form that we would view as an effective default of
its debt obligations under our ratings criteria,” the ratings agency
said in a press release.
The FT noted that Fitch Ratings also indicated that it would likely
label the rollover as a default, while Moody’s and Canada’s DBRS, a
smaller ratings agency, had yet to comment.
The paper added that French and German officials were not “unduly
concerned” about the recent downgrade and that it was unlikely that a
rollover would “constitute a credit event”.
“The important thing is that we avoid a credit event, with all the
resluting negative impact on credit-default swaps which occupied us
after the Lehman bankrupcy,” the FT cited a German official as saying.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: MT$$$$,M$X$$$,M$$EC$,MR$$$$,M$$CR$]
